Mastodon Breaks Social Network Advertising (and That's Good)

I’ve been online long enough to remember how the internet was before the Eternal September. I also remember being surprised when I first saw an ad online—a banner ad on Yahoo, around 1995 or 1996. Since that time, advertisement dollars became the engine of corporate social networks.

Twitter alone made about $4.5 billion from ad services in 2021, about 89% of its total revenue. The so-called “public town square” is actually a walled garden that persuaded 217 million people to come inside and now sells their attention to the highest bidder.

The Fediverse Breaks the Model

The fediverse, the distributed social network that Mastodon is a part of and where many people are landing post-Twitter, feels a little like the before times, before so much of our attention was distracted by online ads. I would love for the fediverse to remain the way it is now, funded by voluntary donations and contributions, but I also know it is unlikely.

There are now more than 8 million people on the fediverse, millions more than there were a couple of months ago. If the fediverse continues to grow at this rate, the companies that pay billions of dollars for ad services to corporate social networks will be forced to develop a “fediverse advertising strategy¨. After all, they must go where the attention of the consumers is and any place where millions of people spend tens of millions of hours a week will be impossible to ignore forever.

But the fediverse, being a collective of instances that agree to communicate or “federate” with each other, shifts the power dynamics. No central broker exists to take bids or convert clicks. And since each fediverse instance is made up of people that can leave that individual instance at any time but remain in the fediverse, there is no walled garden with captive eyeballs. Coke’s or Amazon’s instance could be (and will be) “fediblocked” by many instances, effectively excluded from significant chunks of the social network.

Pay to Federate

To prevent being excluded from the fediverse, I believe that companies will resort to having to pay instances to federate, particularly to the largest instances on the fediverse that are quickly approaching a million users.

But these federation fees (feditolls? fedifees?) will be different from the advertising dollars paid to corporate social networks like Twitter and Facebook since fediverse users can always migrate between instances without ever leaving the fediverse. Instance administrators will have to make federation with advertisers tolerable to avoid losing users to other ad-free instances.

To do this, I think savvy admins will have to institute profit sharing with their users, turning instances into quasi-consumer unions and leveraging their collective bargaining power. Instance admins will negotiate with advertisers on behalf of users to reach an agreement that will be acceptable to the users of their instance. Companies and/or instances that refuse to pay up or that resort to guerrilla advertising would end up fediblocked.

A More Level Playing Field

Instances will want to maximize federation revenue, so they will try to have as many active users as possible, which will probably lead to payouts being proportional to content posted. The more a user posts on their instance, the larger their share of the payout will be.

There will no doubt be greedy instance admins for whom a generous living wage will not be enough and who will want to make backroom deals with companies. If that ever happens, people should leave that instance and the instance should be fediblocked with prejudice.

What could this new model look like? The largest instance is currently mastodon.social, with more than 881,000 people. If Amazon or Disney created an instance to tell the fediverse about Prime Day or the newest Marvel movie, mastodon.social could negotiate a 10-20 million dollar federation fee annually from each company—a tiny fraction of their annual advertising budget. With admins keeping 10% for overhead (hosting, livable wages for them and moderators, &c), users would get an average of $20-40 a year to tolerate the corporate peddling.

Summary

In short, if the largest advertisers want to hawk their products and services, they will have to pay to be part of the fediverse. Instances that are being paid will have a strong incentive to share excess funds to their users. This is model is a radical departure from how things are currently done and might fail to be worthwhile to advertisers and too divisive to users. Part of me certainly really hopes it is. Regardless of the outcome though, the important thing is how the nature of advertising changes on the fediverse: Advertisers can no longer pay an intermediary to have access to the eyeballs of a captive audience.

I am not advocating for corporate presence or advertisement on the fediverse. That is why I run my own personal instance. But I also think advertisers end up going to where the people are. The fediverse provides an opportunity to change the relationship we have with advertisers and shift the balance of power in our favor, maybe forever. I hope this provides a road map for what is possible.